Iraq May Pay Costs of Oil Firms in Kurdish North

Reuters reports progress in the ongoing dispute over oil contracts in Kurdistan.

Iraq’s government could end up paying exploration and extraction costs of oil firms working in Iraqi Kurdistan but not their profits, the oil minister said on Monday, signaling a further thaw in a row over oil wealth.

“We will not pay any profits to the companies but we will look into the receipts of the work they carried out,” Oil Minister Hussain al-Shahristani told al-Salam television station in an interview.

He said he continued to have reservations about the contracts signed by the Kurdistan Regional Government (KRG) with oil firms, especially production-sharing elements of the deals, but that would not stop the resumption of crude exports soon.

Kurdistan and Baghdad have been at loggerheads for months over oil deals Kurdistan signed independently with foreign firms, a move the central government in Baghdad considers illegal.

The Arab-led government in Baghdad refuses to pay the firms, and oil exports from Kurdistan stopped last year.

A joint committee that includes officials from the oil and finance ministries along with representatives of the KRG will study the expenses foreign firms incurred in developing oilfields and decide whether or not to pay them.

“We will discuss them (the receipts) and if the prices are accepted, we will pay it,” he said.

Shahristani has said in recent days that oil exports from Kurdish fields – suspended after having flowed for only two months or so last year – would resume soon.

He said on Monday that the first exports would come from the Tawke field, operated by Norwegian oil producer DNO and Turkey’s Genel Enerji.

DNO was the first foreign company to drill for oil in Iraq after the 2003 U.S-led invasion. Around 38 oil firms are present in Iraqi Kurdistan.

Exports from Tawke and another field, Taq Taq, resumed last June in a brief signal of detente between Kurdish authorities and Baghdad, but halted when the Iraqi government refused to pay DNO and the other companies.

Both sides have made overtures to each other in recent weeks to end the impasse. Baghdad’s hand has been strengthened by a series of deals for oilfields outside the semi-autonomous Kurdish region that could turn it into one of the world’s top three crude producers.